Abu Dhabi’s residential prices increased steadily for the first three months, recording a quarterly rise in the range of 1.8 to 5.6%, as per the leading Dubai-based local consulting firm ValuStrat.
The ValuStrat Price Index (VPI) – which records the change in capital values for a representative fixed basket of properties – witnessed its highest rise since 2016, as every place monitored by the index enjoyed capital appreciation.
Abu Dhabi’s residential prices saw a 3% fall in the first quarter in comparison to last year, said an industry expert.
The first quarter VPI – Residential Rental Values were static quarterly, however, fell 2.8% yearly to 69.7 points. The citywide rental stability was an outcome of softening apartment rentals versus rising villa rentals.
Abu Dhabi’s Gross yields averaged 7.4%, for apartments at 7.7% and villas with 6.9%. Residential occupancy for Abu Dhabi city was calculated at 80%, it added.
The residential VPI for Abu Dhabi’s investment zones for Q1 2021, increased 4.1% quarterly to 65.8 points. This was only the second time the index has seen consecutive quarters of rising since 2016, as the previous quarter saw a 1% rise.
Yearly, capital values were just 3% lesser than the Q1 2020, said ValuStrat in its review.
The weighted average residential value in Q1 was AED 8,643 per sq m (AED 803 per sq ft), apartments stood at AED 9,451 per sq m (AED 878 per sq ft), and villas at AED 6,706 per sq m (AED 623 per sq ft).
All properties observed by the VPI witnessed a quarterly rise in capital values ranging from 1.8% to 5.6%.
Situations with the highest gains were Al Reem Island, Al Muneera Island, Al Reef (villas), Hydra Village, and Saadiyat Island, said the expert.
“No doubt, investor confidence has grown countrywide, and Abu Dhabi is leading the rest of the emirates in terms of real estate market performance, despite Covid-19 related challenges, 2020 witnessed a 28% annual leap in the number of sales transactions,” said Haider Tuaima, the Head of Real Estate Research at ValuStrat.
“It comes to no surprise that the VPI saw its highest increase since 2016, as every location monitored by the index enjoyed capital appreciation,” noted Tuaima.
As long as the residential supply was concerned, Abu Dhabi City had approximately 241,289 residential homes as of 2020. A whole of 3,600 residential units was committed to have been finished, 3,175 apartments and 425 villas/townhouses, he further said.
For 2021, the preliminary approximate of forthcoming units stood at 12,184 properties. These are 11,223 apartments and 961 villas/townhouses.
Declan King MRICS, Managing Director & Group Head of Real Estate at ValuStrat, said it was interesting to see positive momentum in Abu Dhabi’s residential property market carry-over from the previous year, as both investors and owner-occupiers appear to feel this is the right time to buy.
“The housing sector in the capital has been more resilient, given a well-managed supply pipeline in recent years and buyer incentives such as reduced municipality transfer fees on property sales,” he added.
An approximated 111,518 sq m (1.2 million sq ft) office Gross Leasable Area (GLA) was confirmed as completed during 2020, bringing the total GLA in Abu Dhabi city to 3.8 million sq m (41 million sq ft). The initial supply projection for 2021 stood at 142,778 sq m (1.54 million sq ft) GLA.
Office asking rents in essential commercial districts fell 3.5% since Q4 2020 yet were 8.3% higher than a similar period a year ago, expressed ValuStrat in its audit.
The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) stood at AED 840 per sq m (AED 78 per sq ft).
As per the expert, industrial property costs stayed relatively unchanged QoQ with no changes seen during the Q1 of 2021 from the Q4 of 2020.
Rental rates also stayed relatively static QoQ with newly built and modern specification facilities pursuing higher rentals, it further said.